15 Dirty Tactics That Make Walmart The Worst Company In The World
To say that Walmart has a less than stellar record as a company is to understate how hated this company is by a mile. With all the stories which have emerged regarding the company’s practices, you’d think their bottom line would match their reputation.
You’d be wrong to assume that, as Walmart will apparently last forever. Out of every $1 spent in the United States, 8 cents are spent at Walmart by some of the very people who are abundantly aware of the company’s wrongdoings. Every week, a one-third of Americans will go to Walmart.
Why do people keep buying at Walmart when they know what the company stands for? As morally reprehensible as they are as a company, they sure can keep people getting their wallets out at their stores. They buy at Walmart because our society values money above all other things. Ultimately, people won’t care about thousands of employees living below the poverty line in the developed world if they can save a few dollars with every purchase.
Strangely, I believe Walmart’s soaring profits accurately reflect their reputation as a company that’s willing to do anything to keep costs down, especially at the expense of its people.
Let’s investigate the dirty business tactics Walmart employs.
15. Forcing suppliers out of business
Walmart’s philosophy is all about keeping costs down. Their management advocates frugality from top to bottom, and that includes the manufacturers who support Walmart’s product line. Before they can secure the contract, providers have to agree to a “clear policy”, where prices must go down every year.
This mandatory policy for all providers places them in a tough position as they have to slash costs every year, which will invariably translate into people losing their jobs. Since money talks, these companies are forced to bend over and take it, Walmart style, or risk losing the biggest contract of their lives.
14. Appalling environmental practices
In addition to treating the companies that supply its products like crap, Walmart seems to display a similar level of care for the environment. For the sake of keeping costs down, the business has a shocking record of actively violating environmental protection laws and going against clean water regulations.
In 2013, the firm founded by Sam Walton settled a decade-long investigation into its hazardous practices towards the environment, agreeing to pay over $110M to settle several state and federal disputes. It also had to plead guilty to the systematic dumping of hazardous waste into our streets and sewage systems in the process.
13. Reliance on overseas sweatshops and prison labour
Since the death of its founder (and his “Buy America” motto) in 1992, Walmart has only been interested in buying from the cheapest suppliers out there, a decision which has resulted in very unfavourable associations. From the mid-1990s until now, investigations carried out by journalists have exposed an overwhelming number of Walmart’s overseas suppliers, showing them resorting to sweatshops in Bangladesh and prison labour in China.
A 2012 fire in a Bangladesh sweatshop contracted by Walmart killed 112 people who couldn’t survive as a fire exit was blocked and the fire extinguishers didn’t work. This accident was the direct consequence of a Walmart official’s successful effort to block an initiative for global retailers to pay more to Bangladesh factories so these could invest in electrical and fire safety.
12. Inadequate provision of health care to its workforce
The main consequence of focusing on keeping costs down above all other things is that anything that management doesn’t consider a core business activity gets slashed at the first sign of trouble. When Walmart went through some difficulties in 2014, it quickly proceeded to do what any company that focuses on cost over people would do in a similar situation.
As it slashed its earning outlooks for the following year, it decided to also terminate health care benefits to over 30,000 part-time workers under the pretence they worked less than 30 hours per week. At the same time, it also raised premiums for new starters while announcing the unpopular decisions to be the consequence of rising health care costs.
11. Paying its employees incredibly low wages
One of the main criteria by which Walmart’s executives assess and reward the organisation’s store managers is their ability to keep the payroll costs down. Several studies have indicated how close to the poverty line Walmart’s staff are, and that’s a positive when you take into account the firm’s history.
Only a decade and a half ago, the average annual wage for a Walmart clerk was $13,860 while the federal poverty line for a family of three was $14,630. When combined with the sheer scale of the business, the company’s “low-wage, low-benefit” model ends up having highly detrimental effects throughout the United States economy, as we’ll see in later entries.
10. Using undocumented workers and abusing child labour
As we approach the end of our list, it shouldn’t surprise you to find out Walmart resorts to undocumented workers. In 2003, a federal investigation revealed some Walmart executives and store managers were well aware the cleaning services they hired used undocumented workers from Mexico, Eastern Europe and Asia.
A similar enquiry a year later showed Walmart also violated several other labour regulations by forcing minors to work more hours than the ones allowed by law, as well as forcing them to work late at night and during school hours. These minors also had their rest and meal breaks trampled by the company.
9. Forcing older workers out of their jobs
Roughly a decade after it stopped taking out its “Dead Peasant” insurance plans, Walmart came up with another way to cut costs at the expense of its older employees. In the midst of intense criticism due to its low-wage, low-benefit philosophy in 2006, Walmart announced a 6% average pay increase for all new hires in over 1,000 stores in the United States.
So far, so good, but we know better than to trust Walmart’s executive team. In addition to this unprecedented rise in wages, the organization also instituted pay caps for its veteran staff members. By doing so, Walmart pushes older, better-paid senior workers out of the payroll cutting back on wages and benefits with the stroke of a pen.
8. Disgusting working conditions
By now, I’m sure very few people who are not on Walmart’s payroll would risk defending the company’s behaviour towards its employees. In 2008, the company agreed to pay a whopping $352 million to settle lawsuits where it stood accused of forcing staff to work off the clock, denying them overtime, rest and meal breaks.
Unsurprisingly, Walmart also faced stern criticism over its locked doors policy for night shifts, making the staff prisoners at their place of work. This system is designed to protect them in dangerous neighbourhoods, but the risks in the event of emergencies ranging from hurricanes to health and family concerns are too self-evident to ignore.
7. The use of predatory pricing
In spite of what Walmart executives might tell you, predatory pricing is the bread and butter of their business model. What is predatory pricing? In simple terms, it’s the name of the practice of intentionally selling your products at such a low price that you drive your competitors out of business.
While there’s nothing fundamentally wrong with low prices, predatory pricing is a perverse tactic in the sense that companies that do it, only intend to keep prices down for however long it takes to drive all of their competitors out of business. When they have the monopoly, they’ll jack prices up again, and consumers won’t have another option.
In America, Walmart gets away with this while in Germany this practice was deemed illegal. Walmart then decided to take its business elsewhere.
6. Anti-union stance
A large part of Walmart’s strategy of keeping costs as low as possible relies on maintaining a highly tight control on expenditures relating to its staff. A few years ago, the internet activist group Anonymous leaked an internal Walmart Powerpoint presentation discussing why unions were bad for workers.
The company’s employees had to sit through this display of corporate propaganda, which essentially told them unions were only after their money and had no interest in protecting their rights. In an Orwellian take on facts, Walmart even presented a graph showing the decline of America’s middle class, conveniently leaving out that unless these workers band together to fight for their rights, their wages will sink as fast as their benefits dwindle.
5. Taking life insurance policies on its workforce
It’s hard to pick the dirtiest business tactic out of such a list of despicable techniques employed for the sake of profit, but if I was forced to choose, Walmart’s practice of taking life insurance policies on its workforce is the perfect example of the corporate blood sucking philosophy of Sam Walton’s company.
Corporate owned life insurance policies are useful devices for firms to protect themselves in the event of a death of a key employee. Walmart took out such plans for janitors, stockers and clerks essentially profiting from the death of its employees at the same time it deducted the premiums. After facing intense criticism from such a disgusting behaviour, Walmart stopped this practice, also called “Dead Peasant Insurance”.
4. Taxpayers cover Walmart’s labour costs
The point of having a job is to be able to meet your financial obligations, most commonly to do with looking after yourself and your family if you provide for others. For Walmart employees, the situation is slightly different. With their salaries dangerously close to the poverty line, the situation for some members of Walmart’s workforce is so dire it forces them to resort to their state’s welfare programmes.
By paying such low wages, this means that, because Walmart refuses to pay the required salary for people to live with a minimum of dignity, every taxpayer has to foot the bill so that these people can survive. The American taxpayer pays Walmart’s workforce.
3. Paying its workforce in vouchers
In addition to paying a good chunk of its workforce below the poverty line and forcing to resort to welfare programmes, Walmart also pays them in vouchers which are only valid at Walmart stores.
This shady tactic is a double-whammy of nastiness on the company’s part because it doesn’t only deprive workers of the right to spend their money in whichever way they see fit; it directly translates into more money in the back for the business, again at the expense of its workers. Luckily for the company’s workers south of the border, Mexico’s Supreme Court deemed this practice to be illegal in 2008.
2. Understaffed and understocked
When a business places so much energy in sucking the life force out of its suppliers and staff for the sake of lower prices, it’s no wonder to witness the deterioration of the level of service provided to the customer. As the management views labour as a cost driver instead of a factor which can positively influence sales, as soon as the latter fell, it proceeded to cut the former.
With fewer people manning the stores resulting in longer waiting times and with disorganised, scarce and chaotic stock, customers have to wait for 30 minutes or more for help. Studies indicate Walmart could be losing over a billion dollars in sales due to this insistence on keeping costs down, which is deliciously ironic.
1. Bribery of public officials
A New York Times 2012 investigation revealed Walmart’s Mexican subsidiary spent millions of dollars bribing government officials to have their construction and operations permits expedited after a disgruntled former employee was able to provide the incriminatory documents.
Not only was Walmart México engaged in criminal behaviour but Walmart itself had been made aware of this practice several years before the NYT’s exposition. These briberies constituted a violation of both Mexican and United States regulations. However, this hadn’t been the first time Walmart México had broken the law, as in 2003 they’d been caught helping their high-volume customers evade Mexico’s sales taxes.
Sources: nypost.com, nbcnews.com, theguardian.com
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